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BENGALURU : The Competition Commission of India (CCI) has started an investigation to check whether Google Pay (GPay) has abused its dominance of India’s digital payments market, executives at three payment firms aware of the discussions said.

The market watchdog is holding face-to-face interviews with rival payment firms, including PhonePe and Paytm Payments Bank, as part of the probe, the executives said seeking anonymity.

Through its meetings, CCI will seek to understand whether Google is giving users the choice to pay through other payment instruments in addition to GPay. It will also try to ascertain whether Google is leveraging user data on its platform to gain unfair advantage for its own payment platform and also if it has created restrictions for other payment firms to gain unfair advantage. CCI will also check if Google is abiding by the government’s zero-merchant discount rate (MDR) policy.

Under the scanner
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Under the scanner

The executives cited above said while CCI ordered the probe on GPay last November, a formal investigation began in January with the appointment of an additional director general to the antitrust case.

“CCI is still at a nascent point of the investigation and is trying to approach the matter from the perspective of app bundling with the Android OS, search manipulations where Google Pay appears on the top when a user searches for a payment use-case such as recharge on (Google search); and leveraging Google properties and data such as YouTube and Play Store to plant advertisements for its payment service, through ad personalization," said one of the three executives cited above.

The executive said that CCI is modelling its probe on the European Union’s General Data Protection Regulation (GDPR) policy where possible data sharing between the Google suite of products can lead to unfair competitive advantage for its payment service.

France’s data protection authority, CNIL, fined Google $57 million in 2019 for not obtaining user consent to process data for ad personalization, citing a clear violation of GDPR norms.

Digital payments platforms in India have earlier complained about GPay being the default option for payments on Google Play Store, alleging that the US company is abusing the market dominance of its Android mobile operating system to charge an arbitrary 30% commission for in-app purchases through apps listed on its Play Store and manipulating ad keywords to push GPay.

Google denied the allegations in its response to CCI last July.

“Google’s 30% in-app commission is also being questioned in this particular investigation," the third executive said.

PhonePe and Paytm declined to comment. CCI and GPay didn’t respond to emailed queries.

The meetings with other payment firms are expected to enhance the antitrust body’s understanding of the digital payment ecosystem, said two of three people cited above.

“CCI is trying to gain knowledge about the digital payment ecosystem and how Google can give preference to its Google Pay service for payments on different platforms through any possible data-sharing patterns between its payments entity and sister platforms like Google Play, for instance, which improves payment experience and boosts downloads, leading to an unfair advantage over other apps," the second executive said.

The executive also said that sharing of data across platforms by Google could lead to faster checkouts for purchases on Google’s different platforms leading to an “unfair advantage".

This is the third ongoing antitrust case against Google and its subsidiaries in the country. In 2019, CCI began an investigation into Google restricting smartphone manufacturers from opting for alternative operating systems (OS) and bundling its search engine and Google apps into the mobile OS.

In October 2020, CCI was also examining a complaint that claimed Google was abusing its dominant market position in smart television operating systems.

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